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The Unauthorized Bonus Scheme An internal investigation into last year's £166m sale of the vocational charity City & Guilds has revealed that its two most senior executives awarded themselves millions of pounds in bonuses without proper authorization. Kirstie Donnelly, the former chief executive, and finance chief Abid Ismail "directly authorised and paid bonuses to themselves" totaling nearly £3m combined, according to the investigation report. Executive Compensation Details The investigation found that Donnelly received £1.7m while Ismail received £1.2m in unauthorized bonuses. In addition to these bonuses, both executives received substantial salary increases following the charity's privatization. Donnelly's salary was increased by £100,000 annually to approximately £430,000, while Ismail's base pay rose by 30%—about £70,000—to £300,000. The payouts were part of a broader scheme that distributed an additional £2m to other senior executives and 60 junior colleagues. Corporate Governance Failure PeopleCert, the private company that acquired City & Guilds' vocational awards business in October, issued a statement condemning the bonus payments. The company stated that the bonuses "were in direct breach of [Donnelly's and Ismail's] duties and responsibilities as office holders and caused significant harm to the organisation's reputation." Importantly, the payments occurred without the knowledge of either PeopleCert or the former charity owner. Legal and Financial Repercussions PeopleCert has announced its intention to take "all action available" to recover the bonus payments from the two executives. The company specifically stated it will seek to recover £1.7m from Donnelly and £1.2m from Ismail, and will make "appropriate referrals to the relevant authorities." While the company will not attempt to recover bonuses paid to the 60 junior colleagues—concluding they were "neither fully aware nor instrumental in the scheme"—it will request repayment of bonuses from other serving members of the executive leadership team. Regulatory Response The Guardian's reporting on the bonus scheme prompted the Charity Commission to open a statutory inquiry into various aspects of City & Guilds' operations, including "the sale and bonuses awarded to its executives." Following the investigation's launch, Donnelly and Ismail were temporarily suspended while PeopleCert conducted its internal review. The executives have since been approached for comment, with their lawyer indicating they plan to commence litigation against City & Guilds Ltd regarding the matter. Historical Context and Future Implications Founded in 1878 by the City of London and 16 livery companies, City & Guilds developed a national system of technical education and offered qualifications in various fields. The organization was previously owned under a charity umbrella, which claimed it would use financial windfalls from the sale to continue charitable works. However, following the privatization, the new company implemented a £22m cost-cutting drive and reduced its UK workforce, even as executive compensation dramatically increased. The scandal has raised significant questions about corporate governance in the newly privatized organization and may lead to increased scrutiny of similar charity-to-profit transitions.

The LeadThe trustees of City & Guilds London Institute have been accused of attempting to dodge accountability for a "catastrophic failure of governance" by stalling on the launch of an independent inquiry into the £166m sale of the vocational charity's training and accreditation business to PeopleCert last October.The Governance CrisisMembers of the 148-year-old body voted overwhelmingly last month for the trustee board to trigger what would be the third investigation into how the foundation sold its operations to the private operator. However, members complained that the process then seemed to have stalled. The poll followed the Charity Commission opening a statutory inquiry in January, which was mirrored a day later by PeopleCert commissioning its own internal investigation into the deal.Financial FalloutThe controversy centers around the £166m sale that created a new private company called City & Guilds Ltd, owned by PeopleCert, as well as a rebranded charity, City & Guilds London Institute (CGLI). The deal has since been followed by revelations that the now-private City & Guilds plans to shrink its UK workforce as part of a £22m cost-cutting drive, with £13m of "personnel cost synergies" largely achieved by replacing departing UK staff with cheaper overseas hires.Executive Compensation ControversyThe sale sparked outrage when it was revealed that former chief executive Kirstie Donnelly and finance director Abid Ismail were awarded massive bonuses after the sale—£1.7m for Donnelly plus £1.2m to Ismail. The rationale for making the payouts has never been convincingly explained and came alongside sizeable salary increases for the pair, with Donnelly granted an extra £100,000 a year, lifting her salary to about £430,000. Ismail's base pay also increased by 30%, rising by about £70,000 to £300,000. In total, the pay of the top six executives more than tripled after the deal.Accountability DemandsNeil Bates, an elected member of the City & Guilds council, which appoints and advises the trustees, criticized the board's lack of transparency: "Why would they not be accountable for decisions made if everything was above board? It is shocking there has been such a catastrophic failure of governance – and subsequently a failure of accountability." Bates added: "There is £166m – that is what is left of the City & Guilds legacy. We want to remove this trustee board from having responsibility for those funds and replace them with people properly equipped to restore good governance to the City & Guilds organisation."Future of the InstitutionWhile the council has the power to appoint City & Guilds trustees, it cannot dismiss them unless misconduct has been shown. A spokesperson for the charity stated: "The trustees remain committed to working constructively with members to find a clear and proportionate way forward in the best interests of the charity. We are reviewing options to shape this approach, ensuring we address members' concerns while avoiding unnecessary duplication with the Charity Commission's investigation. Our priority is to safeguard the integrity and future of the Institute." Donnelly and Ismail have since left City & Guilds without "any financial settlement," with lawyers acting for them indicating they will be commencing litigation against City & Guilds Limited.